57 slides from Turkiye Petrol Rafinerileri A.s's investor presentation, March 2023
Slide 1: Investor Presentation
Investor Presentation March 2023 Hizmete Özel / Confidential
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by variables and changes in und
Slide 3: Refining Market
Refining Market Hizmete Özel / Confidential
Slide 4: Brent Crude Prices
Brent Crude Prices $/bbl 130 5 yr range 5 yr ave 123.7 2022 2023 + Russian-Ukraine war 118.8 + Impact of sanctions 113.3 112.7 + Post-pandemic demand recovery 110 104.4 98.2 100.0 93.3 91.7 89.9 87.2 90 - Recession fears 81.1 - Zero Covid Policy and its impact on 82.8 82.5 Chinese demand 70 - SPR re
Slide 5: Global Refinery Capacity Changes
Global Refinery Capacity Changes Expectations until 2025: • In the 2019-2025 period, 67% of the net capacity increase comes from Asia and 39% from the Middle East Region. • 67% of the closures intensified after the pandemic come from the OECD region. 2019-2025 Net Capacity Additions Capacity Additio
Slide 6: Middle Distillate Cracks
Middle Distillate Cracks $/bbl Diesel Jet Fuel 5 yr range 5 yr ave 2022 2023 5 yr range 5 yr ave 2022 2023 50 60 47.1 45 43.3 45.2 57.1 55 54.2 42.3 40.7 39.6 40 50 39.0 38.4 46.8 35 45 44.2 40.5 43.8 41.6 33.7 40 30 30.8 37.4 38.4 35 35.3 25 26.1 24.0 31.6 30 20 25 26.3 15 20 12.9 10 9.4 15 12.0 11
Slide 7: Gasoline and High Sulphur Fuel Oil Cracks
Gasoline and High Sulphur Fuel Oil Cracks $/bbl Gasoline High Sulphur Fuel Oil 5yr range 2023 2022 5 yr ave 5 yr range 2023 2022 5 yr ave 50 0 45 44.0 -5 40 -10 38.0 35 -15 30 -16.0 -20.2 25.7 -20 25 24.7 21.8 -22.2 20.4 19.9 -25 20 -28.8 -30.4 -26.5 -26.4 13.4 -30 -27.9 15 12.7 12.5 11.6 16.3 10 10
Slide 8: Heavy Crude Price Differentials to Brent ($/bbl)
Heavy Crude Price Differentials to Brent ($/bbl) 5 0 -5 -10 -15 Arab Heavy Basrah Heavy Kirkuk Iran OPEC+ Cut OPEC+ OPEC+ Cut Russia – CPC Sanctions Decision disagreement Decision Ukraine War Average* -20 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7
Slide 9: Turkish Market
Turkish Market Hizmete Özel / Confidential
Slide 10: Turkish Market, 12M 2022
Turkish Market, 12M 2022 Q1 Q2 Q3 Q4 Diesel 24.1 Jet1 Million 23.2 Tons 22.3 20.3 4.7 5.3 5.0 4.2 2.0 4.7 1.3 7.0 7.4 6.6 - 6.6% 3.4 1.2 + 38.0% 7.4 1.7 2.4 1.0 1.4 6.1 5.3 6.3 6.1 0.6 1.3 1.1 0.7 1.2 0.2 0.7 5.2 5.6 5.6 5.4 1.0 0.9 0.9 0.6 2019 2020 2021 2022 2019 2020 2021 2022 Gasoline LPG 3.0 3.
Slide 11: Turkey's Net Import / Export Balance
Turkey’s Net Import / Export Balance Million Import Export Market Share of Tüpraş Tons -0.2 -0.2 2022 12M Jet 0.4 0.3 -0.4 Diesel 48% -7.3 Jet 85% -8.0 Diesel -5.9 -8.8 Gasoline 98% -13.6 2.0 1.6 Gasoline 1.9 Fuel Choice of Passenger Cars 2022 3.0 2.4 EV/Hybrid , 1% -2.8 -2.9 Diesel; LPG; LPG -2.9 D
Slide 12: Company Overview
Company Overview Hizmete Özel / Confidential
Slide 13: Tüpraş Shareholder Structure
Tüpraş Shareholder Structure Tüpraş is Turkey’s biggest industrial company and leading refiner. Koç Holding Aygaz Opet Koç Holding andGroup Other Koç Other Koç 77% 20% 3% 6.82% 6.83% Energy Investments Inc. (SPV) 46.4% 79.98% 41.7% Foreign Ownership 43%1 100% Free Float2 46.78% 100% 99.23% Domestic
Slide 14: Tüpraş' Refining Assets & Distribution Network
Tüpraş’ Refining Assets & Distribution Network İzmit İzmir Kırıkkale Batman Total Capacity (mn tons) 11.3 11.9 5.4 1.4 30 Turkey’s petroleum Nelson Complexity 14.5 7.66 6.32 1.83 9.5 product needs Storage Capacity (mn m3) 3.0 2.5 1.3 0.3 7.0 CCGT Wind Power Plant Hydro Power Plant Total Electricity
Slide 15: Nelson Complexity of Refining Companies
Nelson Complexity of Refining Companies Mar-23 Hizmete Özel / Confidential Investor Presentation Company Overview www.tupras.com.tr 15
Slide 16: Tüpraş Subsidiaries
Tüpraş Subsidiaries OPET - Distribution Tüpraş Share: 41.7% • 1,857 stations as of 31 December 2022. • As of December 2022 Market share: 18.9% in white products; 31.4% in black products Tüpraş Trading UK - Trading Tüpraş Share: 100% Over 8 million tons of product trade More than 10 million tons of s
Slide 17: Tüpraş Subsidiaries
Tüpraş Subsidiaries DİTAŞ - Marine Transport Tüpraş Share: 79.98% • 2 Crude Oil Tanker: 314,906 DWT • 8 Product Tanker: 166,523 DWT • 4 Bitumen Tanker: 61,450 DWT Körfez Ulaştırma - Railway Transport Tüpraş Share: 100% • ~5% share in Turkish rail freight market • ~2.5 mn ton of product and semi-prod
Slide 18: Tüpraş Subsidiaries
Tüpraş Subsidiaries Entek - Electricity (Tüpraş Share: 99.23%) Entek’s Installed Capacity Production (000 MWh) 66 17.5 MW 112 MW MW 1,600 1,550 1,500 1,542 1,450 178 1,400 1,451 28 MW 1,350 16.4 MW 1,359 MW 1,300 1,341 1,250 24.4 MW 1,200 2019 2020 2021 2022 Natural Gas Combined Cycle Hydroelectric
Slide 19: Operations
Operations Hizmete Özel / Confidential
Slide 20: Q4 Product Yields
Q4 Product Yields Q4 2021 Q4 2022 Other Other Bitumen 2% LPG LPG Kok 7% 3% Bitumen 2% 3% 3% 11% Gasoline Other Kok Gasoline 21% Other Fuel Oil white 4% 21% white 9% Black Prod. 2% Light Light 19% Distil. Fuel Oil Black Prod. 2% Distil. 25% 3% 18% Naphtha 25% Naphtha 1% 1% Mid. Distil. Jet Mid. Disti
Slide 21: Annual Product Yields
Annual Product Yields 12M 2021 12M 2022 Other Other Bitumen 2% LPG 3% Bitumen 2% LPG Kok 8% 3% 10% 4% Gasoline Coke Other 3% Gasoline 21% Other Fuel Oil white 21% white 6% Black Prod. 2% Light Fuel Oil Black Prod. 2% Light 18% Distil. 6% 19% Distil. 25% Naphtha 26% 1% Naphtha 1% Mid. Distil. Jet Mid
Slide 22: Capacity Utilization and Quarterly Production Volume
Capacity Utilization and Quarterly Production Volume Quarterly Production (Million Tons) Capacity Utilization (%) 2019 2020 2021 2022 Crude Oil Semi Product Feedstock Total 8 98 98 100 98 7.1 7.0 96 96 7.0 91 7 7 88 4 8 7 7 9 82 85 84 5 6.9 7 6.5 7 8 9 65 6.0 6 6.0 9 93 93 91 91 91 87 86 81 76 75 75
Slide 23: Sales
Sales • Tüpraş generated 29.5 million tons of total sales in 2022. Total Sales Customer Groups 2022 mn tons 29.8 29.2 29.5 Other 27.6 9% International 4.2 24.5 sales 6.8 6.0 5.9 Jet 21% 4.7 12% Exports Bitumen 25.6 Total Sales, 5% 22.4 21.7 23.5 Domestic Sales 19.8 2022 29.5 mn tons 2018 2019 2020 2
Slide 24: Product Sales in Q4 2022 (Million Tons)
Product Sales in Q4 2022 (Million Tons) • Tüpraş generated 7.2 million tons of sales in Q4 2022, 9% lower y-o-y. • Domestic sales were 4% higher y-o-y in Q4 2022 with better diesel, jet fuel and bitumen sales. Total Product Sales Domestic Sales of Selected Products Diesel Jet Fuel Gasoline Bitumen D
Slide 25: Financials
Financials Hizmete Özel / Confidential
Slide 26: Tüpraş and Med Refining Margins
Tüpraş and Med Refining Margins Tüpraş Net Margin Med Margin Clean Clean Gross Inventory Net Med Processed 28.2 ($/bbl) Gross NET Margin Effect Margin Margin bbl (mn) Margin Margin Q4 2022* 30.0 0.0 30.0 19.0 19.0 29.0 45.5 16.5 12M 2022 23.9 0.7 23.2 15.8 16.5 28.2 198.8 Q4 2021 14.0 3.7 10.4 5.5 9
Slide 27: Income Statement (Million TL)
Income Statement (Million TL) Q4 Q4 Million TL % 2022 2021 % 2022 2021 Net Sales 116,026 56,892 104% 481,765 152,492 216% COGS -96,560 -48,919 -97% -418,988 -136,632 -207% Gross Profit 19,466 7,974 144% 62,777 15,860 296% Operating Expenses -3,084 -1,237 -149% -8,235 -3,318 -148% Income/Loss from ot
Slide 28: Financial Highlights
Financial Highlights Net Income¹ (mn TL) EBITDA (mn TL) Q4 Q3 H1 H1 Q3 Q4 41,045 55,587 17,589 8,908 16,366 1,887 17,812 4,039 11,554 3,713 3,778 14,067 738 545 1,766 3,495 956 7,342 21,409 526 3,243 542 -2,494 1,424 11,902 2,346 383 2,873 1,405 186 977 3,852 495 376 1,043 -814 -155 1,028 2021* 2022
Slide 29: Balance Sheet Analysis
Balance Sheet Analysis Net Debt bn TL In Billion TL In Billion $ bn $ Redemption Schedule (Billion TL) TL Hard Currency $ equivalent 12.0 12.0 2.7 8.4 9.4 60 49.8 -0.9 0.9 40 0.6 2.3 1.4 1.3 0.9 0.1 0.0 0.0 0.1 17.5 20 12.0 -16.5 1.9 0.3 0.3 1.3 Dec-18 Dec-19 Dec-20 Dec-21* Dec-22* 0 Cash & 1 year 1
Slide 30: Profit Before Tax Bridge (2021 – 2022)
Profit Before Tax Bridge (2021 – 2022) 2022 PBT was positively impacted by stronger cracks and wider differential spreads. Million TL 22/03/2023 Hizmete Özel / Confidential www.tupras.com.tr 30 Earnings Presentation
Slide 31: 2023 Expectations
2023 Expectations Tüpraş Net Refining Margin 11$/bbl -12$/bbl • 24-25 mn tons production, 28-29 mn tons sales and 85 - 90% capacity utilization Consolidated Capex ~350 million $ • ~60% of capex for sustainability focused energy efficiency and environmental projects Mar-23 Hizmete Özel / Confidential
Slide 32: 12M 2022 Results
12M 2022 Results Refining Margins ($/bbl) Capacity Utilization (%) 18.0 Tüpraş Net Margin 16.0 14.0 Tüpraş FY 100 91.6 % total capacity 12.0 Target 90 utilization in 12M 80 10.0 70 2022 8.0 16.5 60 50 29.5 mn tons of 6.0 40 91.6 4.0 30 sales and 26 mn 2.0 20 tons of production 0.0 10 in 12M 2022 0 1
Slide 33: Investments (Million $)
Investments (Million $) Achievements & Ongoing Projects Strategic Transition - Investment Program • c6.9 bn USD investments since privatization • 27% CO2 emission reduction by 2030 (scope1+2), 100% • Reached 9.5 Nelson Complexity reduction by 2050 • Capability to process heavier and more sour crude
Slide 34: Financial Policy
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty risk, commodity, interest rate and currency exposure. Proactive in liquidity risk management & targets/limits for financial ratios: Leverage & • Net financial debt/EBITDA • Cur
Slide 35: FX Exposure Management (31 December 2022)
FX Exposure Management (31 December 2022) Consolidated Hard Consolidated Hard Currency Assets Currency Liabilities Million $ Payables & Other Cash Liabilities 1,118 2,456 Tüpraş continues to employ strict FX Receivables & Other Assets ST Financial Loans policies to mitigate currency risks 239 321 •
Slide 36: Strategy
Strategy Hizmete Özel / Confidential
Slide 37: Strategic Transition Plan – Investment Areas
Strategic Transition Plan – Investment Areas SUSTAINABLE REFINING ZERO CARBON ELECTRICITY Energy Efficiency and Decarbonization Projects Integrating Zero Carbon Electricity to produce Green H2 • Remain as a Major EBITDA Contributor • Ensure affordable green H2 production, capturing • Improve energy
Slide 38: Strategic Transition Plan – Emission Reduction
Strategic Transition Plan – Emission Reduction EMISSION REDUCTION SCOPE 1 & 2 BASE YEAR SCOPE 1 + 2 7.3 MN TONNES -27% -35% -49% We will invest in energy efficiency & decarbonization Projects, green hydrogen & zero carbon electricity usage in refining to reduce scope 1 & 2 emissions -100% 2017 2030
Slide 39: Strategic Transition Plan - Financials
Strategic Transition Plan - Financials Will eliminate our scope 1 & 2 emissions by 2050 while executing our plan and achieving these results. We are $350mn average CAPEX until 2035, totaling $5 bn. sustainable ROACE will remain above 25% creating ~ $9bn total CF until 2035 and With ample CF, Net Deb
Slide 40: Strategic Transition Plan – Latest Updates
Strategic Transition Plan – Latest Updates ZERO CARBON ELECTRICITY BIOFUELS As of Dec’22 end we have initiated ZCE capacity installations in our refineries with a total of 122.6 MW Solar & 12.6 MW Wind PP Basic engineering studies were completed İzmit to produce sustainable aviation fuel, We Solar -
Slide 41: ESG
ESG Hizmete Özel / Confidential
Slide 42: Tüpraş's Environmental Highlights
Tüpraş’s Environmental Highlights Energy Intensity Achievements Energy Intensity Targets 99.1 99.1 102.2 5.6 2.6 98.44 2.8 0.1 91.2 94.9 93.5 2017 Ongoing Other Projects Future Energy Future Other 2030 Target Energy Efficiency Projects 2018 2019 2020 2021 2022* Efficiency Projects Projects Greenhous
Slide 43: Tüpraş's Social & Governance Highlights
Tüpraş’s Social & Governance Highlights Strong Policies have been effectively implemented for years Board of Directors’ Composition Committees under BoD Corporate Governance 11 members Risk Management Audit Corporate Governance Rating 9.65 Four members are Executive independent Ethics Health & Safet
Slide 44: Appendix
Appendix Hizmete Özel / Confidential
Slide 45: 2023 Refinery Maintenance Schedule
2023 Refinery Maintenance Schedule Refinery Unit Starting Quarter Duration (weeks) Purpose Planned Crude Oil & Vacuum Q1 7 Ongoing Batman Seasonal Crude Oil & Vacuum Q4 6 Planned FCC Q1 7 Ongoing Crude Oil, Vacuum, CCR, Q1 8 Revamp Ongoing İsom. İzmir Lube Complex Q1 8 Ongoing Crude Oil , Vacuum Q4
Slide 46: Turkish Market Fuel Consumption 2017-2021
Turkish Market Fuel Consumption 2017-2021 Million Tons Motorin Jet Fuel* 28 -2.4% -4.4% +0.5% +10.1% 24.9 8 24.2 23.6 22.5 22.7 +10.5% 5.0 +6.5% 5.3 -54.4% 4.5 14 4 +41.2% 3.4 2.4 0 0 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Gasoline LPG -7.4% 4 5 +1.6% 4.1 +0.8% 4.2 +1.2% 4.1 3.9 3.9 3.0 4
Slide 47: Competition - STAR Refinery
Competition - STAR Refinery Timeline Turkish Market Structure (mn tons) Turkish Turkey Tüpraş STAR Total Market Balance Demand Demand* LPG 1.1 0.3 1.4 4.2 -2.8 Petchem F. 0.2 2.6 2.8 Gasoline 6.1 6.1 2.4 3.7 • Feasibility studies began in 2010 and Jet Fuel 5.2 1.6 6.8 5.3 1.5 construction kicked off
Slide 48: Competition - Regional Competition
Competition - Regional Competition • Tüpraş competes with 71 refineries in the Mediterranean and Black Sea markets. • Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia flows Mediterranean Black Sea 54 Refineries ~7.8mbd 17 Refineries ~1.8mbd Mar-23
Slide 49: European Pump Price Comparison
European Pump Price Comparison Turkish fuel prices are highly competitive with other European countries. Gasoline (TL/Lt) Diesel (TL/Lt) Refinery Price Tax Refinery Price Tax 40 40 35 35 30 30 15.0 15.3 21.3 13.3 14.9 14.4 16.5 25 14.9 16.6 16.9 17.8 18.4 25 20 20 5.4 15 5.4 15 10 10 20.2 19.4 20.0
Slide 50: Tüpraş Balance Sheet (Million TL)
Tüpraş Balance Sheet (Million TL) 31.12.2022* 31.12.2021* Diff. Diff. (%) Current Assets 119,711 66,515 53,195 80 Cash & C. Equivalents 49,770 21,176 28,594 135 Trade Receivables 21,418 13,797 7,621 55 Derivatives 3,597 3,824 -227 -6 Inventories 36,046 23,758 12,288 52 Pre-paid expenses 749 193 555
Slide 51: Dividend (TL)
Dividend (TL) Avg. Payout Ratio: 90%* Strategic Transition 101% 102% Dividend Plan 79% 87% 89% 77% 80% 66% 64% 15.2 15.2 13.6 14.8 13.3 10.2 Our new business model 5.8 5.8 6.5 7.2 6.2 enables us to pay ~80% average 5.0 3.9 3.9 4.8 3.2 2.5 2.9 3.0 1.6 0.0 2.1 0.0 0.0 0.0 33% dividends and we will rem
Slide 52: Tüpraş - Ratings
Tüpraş - Ratings Tüpraş BIST Corporate Governance Rating Score Credit Rating Scores Average 96.5 Foreign Currency Long Term Tüpraş B (Stable) B3 (Stable) Shareholders 95.5 Turkey B (Negative) B3 (Stable) B+ (Negative) Koç Holding B3 (Stable) B+(Negative) Transparency 97.3 Analyst Recommendations Sta
Slide 53: Tüpraş Production Flow and Yield Breakdown
Tüpraş Production Flow and Yield Breakdown • Tüpraş has 30 million tons of production capacity • Tüpraş operates 4 refineries with an integrated system optimization program Flow Diagram # of Capacity Key Units Units (m3/d) LPG LPG, 3.5% MEROX CRUDE OIL 8 99,420 Gasoline Naphtha, VACUUM DIST. 8 42,75
Slide 54: RUP Feedstock and Production
RUP Feedstock and Production • Residuum Upgrade Plant (RUP) was completed in 2015 and it is the main conversion unit of Tüpraş. • First periodic maintenance was completed in Q2 2019. 3192 665 184 ~2.4 mt & Jet ~2.8 mt 909 132 Total Processing ~5.5 mn tons Total Output ~5.1mn tons Mar-23 Hizmete Özel
Slide 55: LPG and Naphtha Cracks
LPG and Naphtha Cracks $/bbl LPG Naphta 5yr range 2022 5 yr ave 2023 5yr range 2022 5 yr ave 2023 5 5 0 -2.7 -5 -4.5 -5 -7.2 -6.4 -10 -10.5 -8.9 -15 -15 -20 -18.9 -23.2 -21.5 -25 -28.2 -22.1 -24.0 -23.4 -23.1 -23.0 -25 -29.5 -35 -31.7 -30 -34.6 -30.8 -30.7 -41.7 -39.6 -35 -42.2 -45 -43.0 -44.7 -40 -
Slide 56: Koç Holding
Koç Holding Turkey’s Leading Investment Holding Company • Koç Holding is Turkey’s largest industrial and services group • The only Turkish company in Fortune Global 5002. ~9% ~7% ~19% Koç Group’s Pioneer in its Sectors Combined Total Exports / Market Cap/ Revenues / Turkey’s Borsa Istanbul GDP1 Expo
Slide 57: Investor Presentation Latest
Investor Presentation Latest Webcast Sustainability Report Strategic Transition Plan tuprasir@tupras.com.tr Hizmete Özel / Confidential